Corporate vertical marketing system

The concept of corporate vertical marketing systems (VMS) is a strategy that companies use to increase their efficiency and profitability. It involves the collaboration of different companies in a vertical chain in order to create a more efficient and profitable distribution of products. VMS can help companies reduce costs, increase sales, and improve customer service. By understanding the different types of corporate VMS and the advantages and disadvantages of each, companies can make the best decisions for their business.

Types of Corporate Vertical Marketing Systems

There are three main types of VMS: administered, contractual, and corporate. Each type offers different advantages and disadvantages.

  • Administered Vertical Marketing System – This type of VMS is controlled by a single company. The company controls the flow of products from the manufacturer to the retailer, and can decide how products will be marketed, distributed, and sold. This type of VMS is usually used when there is a monopoly in the industry. It can be a great way to increase profits, but it can also lead to higher costs.
  • Contractual Vertical Marketing System – This type of VMS involves two or more companies that cooperate to create a more efficient and profitable system. Each company has its own responsibilities and benefits from the collaboration. This type of VMS can be advantageous because it allows companies to reduce costs and increase profits, while still providing customers with a quality product.
  • Corporate Vertical Marketing System – This type of VMS is a combination of administered and contractual VMS. A single company controls the flow of products from the manufacturer to the retailer, but it also contracts with other companies to help in the distribution and marketing of the product. This type of VMS can be advantageous because it allows companies to reduce costs and increase profits, while still providing customers with a quality product.

Advantages and Disadvantages of Corporate Vertical Marketing Systems

The advantages and disadvantages of corporate VMS vary depending on the type of system used. Generally, VMS can help companies increase profits and reduce costs, but they can also lead to higher prices and less competition. Here are some of the advantages and disadvantages of corporate VMS:

  • Advantages:
    • Reduced costs and increased profits.
    • Improved customer service.
    • Enhanced product distribution.
    • Improved product quality.
  • Disadvantages:
    • Higher prices.
    • Less competition.
    • Increased risk of market domination.

Understanding the different types of corporate VMS and the advantages and disadvantages of each will help companies make the best decisions for their businesses. By taking advantage of the benefits that VMS can provide, companies can increase their efficiency and profitability.

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